States push to slash GST-free threshold

PRESSURE has intensified on the federal government to apply the GST to internet purchases valued under $1000, with every state and territory supporting the move.

While only NSW supports extending the rate or the base of the GST in its present form, there was unanimous support at Friday's Council of Australian Governments meeting in Canberra to lower threshold for online purchases to help shore up dwindling revenue for the states.

Premier Barry O'Farrell ... said the problem was only going to worsen as internet sales increased. Photo: Andrew Meares

The Prime Minister, Julia Gillard, reiterated that the idea was under consideration but at this stage it would cost more to collect the GST on individual parcels than the revenue it would collect.

A review released last week by an expert panel recommended an immediate reduction to $500 and then reducing it to $20 in the longer term.

The NSW Premier, Barry O'Farrell, said the problem was only going to worsen as internet sales increased and soon the costs would be outweighed by the revenue. Queensland's Campbell Newman said there was already ''significant revenue leakage''.

With the federal government likely to dump its plans to return the budget to surplus because of cost pressures of its own, Mr O'Farrell said ''what worries me'' are dwindling GST revenues while demands for state services increases.

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The COAG meeting, the last for the year, also agreed to reforms to the electricity market to slow the increase of power prices in future years.

Ms Gillard stuck to her claim that an average household would be spared increases of up to $250 a year through the measures, which including allowing consumers from January 1, 2014, to better manage their power use through such technology as smart meters, the use of which will be voluntary.

The Australian Energy Regulator will have its powers and funding boosted, allowing it to better police the process of ''gold-plating'' in which companies overinvest in poles and wires because the present system rewards them with dividends which are then passed on as increased power bills.

The investment rules for networks will also be changed. The communique released after the meeting warns that full implementation of the agenda ''will take sustained commitment over time'', meaning there will be no noticeable effects any time soon. Mr O'Farrell said ''it doesn't deliver anything until after the next federal election campaign and who knows who will be prime minister then''.

In what one source described as typical of the whole meeting, the parties could not even agree on how to best legislate to change the laws of royal succession so the child of the Duke and Duchess of Cambridge can sit on the throne if she is a girl. Australia is one of 16 Commonwealth nations which need to legislate to allow for succession regardless of gender and whether they have married a Catholic.

Ms Gillard said her advice was the states should all legislate to refer to the Commonwealth the ability to legislate the change. Queensland has different advice which says all the states and the Commonwealth need to legislate separately.

All parties agreed to support the royal commission on child sexual abuse. The Commonwealth will foot the bill for the commission while the states agreed to remove any barriers that may impede the inquiry from investigating state-run institutions.